It's Easy To Move Brokerage Accounts

MONEY TALK

Q. I have about $200,000 held at a full-service brokerage house. The firm sells only load funds, and charges fairly high commissions on stock trades.

How can I move this money to an online firm that sells no-load mutual funds and charges lower commissions on stock trades?

And what should I look for in an online broker?

T.V.J. -- Chicago

A. Though some people might imagine this task to be comparable to selling a house, moving a brokerage account from one firm to another is almost as easy as opening a checking account.

You typically have to follow three sequential steps:

Retrieve your most recent account statement from your current firm.

Find a new firm (see below for details).

Call your newly chosen firm to learn the procedures for transferring the account from your current firm to the brokerage where you'd now like to warehouse your stocks, bonds and mutual funds.

The process for transferring an account typically works like this: You fill out a new account application.

Next, you fill out a so-called ``asset transfer form,'' with which you would enclose your most recent account statement from your existing brokerage firm.

A transfer form authorizes your new firm to move assets (stocks, bonds, mutual funds, etc.) from your old firm to the new one's account processing offices.

The firm-to-firm transfer of your account should be complete within two or three weeks, industry sources said.

With online trading volume down from the record levels of 1999 and 2000, online brokerage firms are working harder than ever to capture your dollars, said Tom Watson, a financial services industry analyst with Forrester Research Group in Cambridge, Mass.

Are the online brokers working hard enough? That's a question you must ask yourself. Some full-service firms might provide help -- including advice or record keeping -- that you might not get from an electronic brokerage.

If, after a little soul searching, you're still intent on moving your account, shop around for a new firm by asking many questions.

Am I only looking for $5 stock trades, with little or no service? Do I need help from a local branch office? Do I want to make all of my investment decisions on my own, or do I want occasional help?

Do I want a broad-as-possible selection of no-load, no-transaction-fee mutual funds? Do I want only simple financial products (stocks, bonds, mutual funds or bank CDs)?

Do I want more complicated products, such as variable annuities, unit investment trusts, preferred stocks, convertible bonds, commodities futures and options on stocks?

Do I want sophisticated trading tools, including up-to-the-minute stock quotes? Or do I want a company that provides self-help tools and pamphlets for novice investors?

Before or during your search, consider visiting a public library to track down three magazines: the October 2004 edition of Kiplinger's Personal Finance magazine; the August 2004 issue of Smart Money magazine; and the March 8, 2004, issue of Barron's financial weekly.

These specific issues review dozens of brokers of all stripes: bare-bones, red carpet service and everything in between.

Q. In your Oct. 10 column on share classes (A,B, and C) for load mutual funds, you omitted some important facts.

Class B shares are not eligible for ``break points'' (or commissions that can be reduced, on a graduated basis, as you invest larger and larger sums of money).

Class B shares are also pushed by some brokers because the back-end sales charges discourage clients from moving their money to a new fund or new firm. And Class B shares, as you also noted, are not always the worst choice -- but they are almost never the best.

M.B. -- Baltimore

A. The U.S. Securities and Exchange Commission has warned investors about Class B shares -- and how they are often more expensive to own than Class A shares or Class C shares.

Yet there's still no way to draw an infallibly clear conclusion about which mutual fund share class is always best -- A, B or C. That's why investors should visit this link online -- www.sec.gov/answers/mfclass.htm -- and look for the ``mutual fund cost calculator'' at the bottom of the page.

After you open the cost calculator, plug in the following information: the name of the fund you're being sold; the share class (A, B or C); the fee structure for each share class within that fund; the amount you plan to invest; the length of time you plan to hold that fund; and an expected annual rate of return.

Play with the cost calculator for a few hours, and you might have a chance to discern which share class would present the lowest-cost option for investing.

Readers with questions about personal finance can write to ``Money Talk,'' The Hartford Courant, 285 Broad St., Hartford, CT 06115. They can also send e-mail to lubanko@courant.com or call 860-241-3726.

In letters, e-mails or phone calls, please mention your name, age and a rough guess of how much you have to invest or have invested. Details bring more life to questions and make better answers. Confidentiality will be assured, and only your initials will be used.